The costs and benefits of Pantawid Pamilya

THOUGHT LEADERS

The costs and benefits of Pantawid Pamilya

There is growing evidence showing positive outcomes for the government's conditional cashtransfer

The Pantawid Pamilyang Pilipino Program (4Ps), the governments conditional cash transfer(CCT), has come into scrutiny by legislators with significant resources proposed for it next year.From P4 million in 2007 to support 6,000 households, the 2014 budget was P62.6 billion toassist 4 million households, and will even grow next year with the extension of support tochildren in high school.

According to the World Bank staff, Pantawid has become the third largest CCT program globally,next only to Brazil (8.8 million households) and Mexico (6.5 million households). The CCTshould certainly be scrutinized, and so with every program involving public funds: everyoneshould ask about the value of each peso spent in government programs and projects.

In a previous article, I pointed out that poverty incidence has not changed, even with the CCT,but not to the fault of Pantawid since all things have not been equal. Climate disasters and otherfactors put nearly-poor households at risk of falling into poverty. At a Department of SocialWelfare and Development (DSWD) forum held last November 17, it was suggested that povertywould have further worsened without Pantawid. Using data from the 2013 Annual PovertyIndicator Survey (APIS), conducted by the Philippine Statistics Authority (PSA), the poverty rate(of 25%) could be as much 26.4% without Pantawid. Even the extreme poverty rate (of 11.1%),the proportion of Pinoys whose income is less than needs for food, would be 1.4 percentagepoints higher without Pantawid (12.5%) in place.

National Among Pantawid Beneficiaries

Note: Estimates generated by World Bank Staff using data from national household surveysconducted by PSA, as presented in DSWD forum on Pantawid Pamilya 2nd Wave ImpactEvaluation, Nov 14, 2014.

Among CCT beneficiaries, the increase in poverty rate without Pantawid is even higher.The costs and benefits of Pantawid PamilyaPoverty among beneficiaries (at 58.1%) would be 6.4 percentage points higher (64.5%) withoutthe CCT. Doesnt this suggest that some CCT households are not poor? Certainly, butindependent evaluation by the Social Weather Stations shows that most of these non-poorbeneficiaries are nearly-poor.

It must be understood that government officially defines poor according to income data andpoverty thresholds. The PSA generates income data through a meticulous process of askingdetailed information on income through surveys. The DSWD, through their Listahanan, on theother hand, obtains information on facilities (such as electricity, toilets, walls, roofs) and assets(such as refrigerators, television sets, and the like), and on the basis of a statistical modelestimates household income.

There are errors in identifying poor households (when a non-poor household is thought to bepoor, or a poor household is tagged as non-poor), but DSWD has a process for delisting the non-poor, and also for having the poor who are not in its list to be enlisted, subject to verification.

Further, the World Bank estimates that more than four fifths (82%) of Pantawid beneficiaries arefrom the bottom 40 percent of income distribution, and more than half (53%) are from thebottom 20 percent. Figure 1 shows that when Pantawid is compared in targeting accuracy withother CCTs, the DSWD program performs better than all CCTs with a large coverage in thepopulation (of more than 15%), except for that of Brazil.The costs and benefits of Pantawid Pamilya

Figure 1. Targeting accuracy to the poorest 20 percent of CCTs with more than fifteen percentcoverage of the population. Note: Estimates generated by World Bank Staff, as presented inDSWD forum on Pantawid Pamilya 2nd Wave Impact Evaluation, Nov 14, 2014.

Another measure of poverty is the poverty gap index representing the average amount of incomerequired by the poor to reach the poverty line, in relation to the poverty line. APIS 2013 datashows that Pantawid has increased the income of beneficiaries so that they have moved closer tothe poverty line: per peso cash grant, the poverty gap has been reduced by 61 centavos.

In 2013, Pantawid beneficiary families received an average of P1,407 of monthly cash grants, ifthey sent their 3 beneficiary children to school, and received health services for their householdmembers. Without the cash grants, these families had an average per capita income of P13,293,whereas the poverty line per person was P19,262. Thus, the amounts given will not really helpthem cross the poverty line, but are only truly Pantawid. About half of cash grants are used forThe costs and benefits of Pantawid Pamilyafood, a quarter (25%) on educated-related expenses, while 7% is used on health, and close tonothing is used for recreation or alcohol.

The PSA estimated that in 2012, the "income gap" of the poor, i.e. the total amount required forall poor persons to cross the poverty line (assuming we could identify them and give them justwhat they needed, without even considering the costs of identifying them) was P136.6 billion,whereas the full CCT budget covered P39.4 billion.

So while the CCT budget is large, when you drill to the beneficiaries, this is still not enough tohelp them get out of poverty.

The amounts have even been eroded by inflation: in the pilot program in 2006, maximum cashgrants were a fourth (23%) of household income, but by 2013, this went down to less than a tenth(7%). Once children beneficiaries have finished schooling and join the labor market, we expectthe households to have better incomes, but this wont happen now.

Not the best way?

Finally, some opine that giving money to the poor is not the best way to help since the poor maybecome dependent on that assistance.

A study by Dr. Aniceto Orbeta and Dr. Vicente Paqueo, two colleagues at PIDS, with Dr.Christopher Spohr of ADB suggests that Pantawid has actually increased the desire for work ofthe household head and the spouse, as well as all adult members 18 years and above, and middle-aged workers 35-54 years old. They point out that parents work to compensate for loss ofincome from children who attend school. When people publicly recognize the importance ofeducation, families are convinced to keep their children in school. Households also respond byexerting more effort.

In terms of child labor, Orbeta, Paqueo and Spohr show that Pantawid also has significantlyreduced hours of work for pay of elementary school-aged children 6 to 11 years old, althoughPantawid did not significantly affect the incidence of child labor.

In an independent study, other colleagues at PIDS, namely, Dr. Celia Reyes and Mr. ChristianMina, estimated using APIS 2011 that Pantawid increased school participation of children aged6-14 by 3 to 4.6 percentage points. Around 96.3 percent of children of 4Ps families attend school,while among matched non-4Ps families, i.e. households similar to Pantawid beneficiaries whodid not get cash grants, the school participation rate ranged from 91.7 to 93.3 percent. Increasingschool attendance has been the main objective of the program, and it is worth noting that theprogram has achieved outcomes that it was designed for.

What deserves reexamination

The costs and benefits of Pantawid PamilyaIn a paper on inclusive growth that I helped prepare for the Asian Development Bank (ADB), itcan be seen that the proportion of the youth (aged 1524) in the Philippines (see Table 2) withless than 4 Years of schooling (called education poverty rate) had hardly changed from 5.3% in1993 to 4.9% in 2008. The Philippines has had little improvements in the average years ofschooling among young before government expanded the coverage of Pantawid.

In addition, data in 2008 shows that prior to Pantawid, the share of our youth with less than 4years of schooling among the poor (19.0%) was as much as four times the national average(5.3%).

Extreme Education Poverty Rate Education Poverty Rate

Note: Estimates prepared by ADB staff using data from 1993 and 2008 National DemographicHealth Survey (conducted by PSA)

With the conduct of Pantawid, we would expect more and more returns to these investments inhuman capital. The CCT was premised on the idea that the poor have more opportunity costssending their children to school, and that people respond to incentives.

There is growing evidence showing positive outcomes for Pantawid. In the long run, we wouldexpect to see even more evidence of impact on poverty conditions in the country.

What deserves reexamination in Pantawid is the uniform cash grant, which has eroded in value.Opportunity costs for sending children to school and keeping them there is not uniform: for boys(as against girls), for rural children (as against urban kids), and also for older kids, the costs arehigher, so incentives for these children must also be higher. - Rappler.com

Dr. Jose Ramon "Toots" Albert is a professional statistician who has written on povertymeasurement, education statistics, agricultural statistics, climate change, macro prudentialmonitoring, survey design, data mining, and statistical analysis of missing data. He is a SeniorResearch Fellow of the governments think tank Philippine Institute for Development Studies,and the president of the countrys professional society of data producers, users and analysts, thePhilippine Statistical Association, Inc. for 2014-2015. From 2012-2014, he served as SecretaryGeneral of the now defunct National Statistical Coordination Board (NSCB). He is also amember of the United Nations Global Pulses Data Privacy Advisory Group.The costs and benefits of Pantawid Pamilya